ASSYSTEM: ASSYSTEM E&I's business development in the nuclear engineering market in the Middle East and full-year 2018 outlook for the Assystem Group
Assystem E&I's business development in the nuclear engineering market in the Middle East and full-year 2018 outlook for the Assystem Group
Paris, 29 June 2018, 8.00 a.m. (CEST) - Today, Assystem S.A. (ISIN: FR0000074148 - ASY), a leading player in engineering, released an update on its business development in the nuclear engineering market in the Middle East and its outlook for the Group's full-year 2018 performance.
BUSINESS DEVELOPMENT IN THE NUCLEAR ENGINEERING MARKET IN THE MIDDLE EAST
Assystem E&I has recently been awarded a sizable contract by K.A.CARE, the Saudi Arabia authority responsible for developing nuclear and renewable energy. This new contract - won after an international call for tenders launched by K.A.CARE - is a positive reflection of Assystem's underlying business strategy and its ability to broaden its international reach in the nuclear engineering market, especially in the Middle East.
The services included in the contract will be rendered over a period of eighteen months and involve site characterisation studies (geological and seismic analyses, etc.) as well as impact studies (environmental and demographic effects and the impact on electricity grids). The work to be carried out forms part of the project to build Saudi Arabia's first nuclear power plants following the Saudi government's announcement in July 2017 that it intends to add nuclear power to its energy mix with the objective of diversifying and boosting its power production capacity.
These characterisation and impact studies are of the essence for the choice of the most suitable site on which to build the first Saudi Nuclear Power Plant. They will also provide important technical details for the purpose of designing the right nuclear power plant technology, based on site specifications.
The Group won this contract thanks to the synergies it can leverage between its long-standing expertise in the nuclear sector, its specific skills in site characterisation provided by its Turkey-based subsidiary, Envy, and its local knowledge obtained through its Saudi-based subsidiary, Assystem Radicon.
Meanwhile, Assystem E&I has carved out a long-term position within the new-build project for civil nuclear reactors led by the Russian operator, Rosatom, in Turkey (four VVER reactors with a capacity of 4.8 GW), by capitalising on the characterisation studies performed by Envy for the Akkuyu site. It will also provide the same services to Rosatom for the start-up of a similar programme in Egypt.
Lastly, by steadily broadening the scope of its services, Assystem E&I is continuing to grow the revenue it generates with ENEC, the operator of the nuclear reactors currently being built in the United Arab Emirates based on Korean technology. Assystem has set up this week a joint venture with Nama Development Enterprises, Sheikh Mohamed Al Nayan's industrial holding company - to help cementing its long-term positioning within the UAE's nuclear industry by drawing on local skills as part of the Group's work on the engineering and maintenance of the Emirati nuclear programme.
These business developments illustrate how Assystem is committed and able to help "new-entrant" countries in developing their nuclear programmes, particularly in the Middle East and Africa, and by extension, to partner major nuclear players in exporting their expertise beyond their own borders. They represent a further stride along our nuclear engineering growth trajectory, which is also being propelled in Europe by the services we offer for both new-builds and existing plants and for decommissioning operations.
The above-described operations should account for over 50% of Assystem E&I's total revenue in the Middle East (including Turkey) in 2018, which is expected to come in at between €35 and €40 million. In parallel, our revenue in the region is being boosted by the re-start of infrastructure programmes in Saudi Arabia.
UPDATED OUTLOOK FOR FULL-YEAR 2018
When it released its annual results for 2017, Assystem announced the following financial targets for 2018:
- at least 10% year-on-year growth in consolidated revenue and EBITA;
- free cash flow representing over 5% of revenue.
Based on year-to-date actual results for 2018 and available full-year forecasts, we are standing by our free cash flow and revenue growth targets, especially given that, as previously announced, revenue growth is expected to be much stronger in the second half of the year than in the first.
On the other hand, as the situation currently stands, the target of at least 10% EBITA growth no longer seems attainable. Based on the information currently available, we are revising this target downwards to year-on-year stability in absolute value terms. In the same way as for revenue, we expect to see a significantly different picture between the first and second halves of 2018, with EBITA decreasing year on year in the first half, then swinging back up in the second.
The three main underlying reasons for this revision of Assystem's consolidated EBITA target for 2018 are as follows:
- The fact that actual cost dis-synergies arising as a result of recent changes in the Group's scope of consolidation have exceeded our original estimates, particularly for recurring operating costs related to information systems.
- Significant one-off costs that we have incurred for client communications and recruitment campaigns, again due to the changes in our scope of consolidation.
- The legal restructurings and corresponding mergers of operating entities in France, Belgium and Switzerland carried out for the purpose of setting up Assystem Care, the entity that brings together, in those three countries, the Group's Life Sciences activities that existed prior to its acquisition of BQG in late 2017 and the activities of BQG. These restructurings and mergers are having a temporary disruptive effect on Assystem Care's operations and are therefore weighing on its profitability for 2018.
2018 FINANCIAL CALENDAR
- 26 July: First-half 2018 revenue
- 10 September: First-half 2018 results - Presentation meeting on 11 September at 8.30 a.m. (CEST)
- 8 November: Third-quarter 2018 revenue
Assystem is an international engineering group. As a key participant in the industry for 50 years, the Group supports its clients in managing their capital expenditure throughout their asset life cycles. Assystem S.A. is listed on Euronext Paris.
For more information please visit www.assystem.com /Follow Assystem on Twitter: @Assystem
CFO & Deputy CEO
Tel.: +33 (0)1 55 65 03 10
Tel.: +33 (0)6 83 03 70 29
Investor relations - Komodo
Tel.: +33 (0)6 83 28 04 15
© 2018 GlobeNewswire, Inc. All Rights Reserved.